Correlation Between NexPoint Real and Real Estate
Can any of the company-specific risk be diversified away by investing in both NexPoint Real and Real Estate at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining NexPoint Real and Real Estate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NexPoint Real Estate and Real Estate Securities, you can compare the effects of market volatilities on NexPoint Real and Real Estate and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in NexPoint Real with a short position of Real Estate. Check out your portfolio center. Please also check ongoing floating volatility patterns of NexPoint Real and Real Estate.
Diversification Opportunities for NexPoint Real and Real Estate
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NexPoint and Real is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding NexPoint Real Estate and Real Estate Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Estate Securities and NexPoint Real is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on NexPoint Real Estate are associated (or correlated) with Real Estate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Estate Securities has no effect on the direction of NexPoint Real i.e., NexPoint Real and Real Estate go up and down completely randomly.
Pair Corralation between NexPoint Real and Real Estate
Assuming the 90 days trading horizon NexPoint Real Estate is expected to under-perform the Real Estate. In addition to that, NexPoint Real is 1.13 times more volatile than Real Estate Securities. It trades about -0.06 of its total potential returns per unit of risk. Real Estate Securities is currently generating about 0.18 per unit of volatility. If you would invest 2,916 in Real Estate Securities on September 2, 2024 and sell it today you would earn a total of 79.00 from holding Real Estate Securities or generate 2.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 85.71% |
| Values | Daily Returns |
NexPoint Real Estate vs. Real Estate Securities
Performance |
| Timeline |
| NexPoint Real Estate |
| Real Estate Securities |
NexPoint Real and Real Estate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NexPoint Real and Real Estate
The main advantage of trading using opposite NexPoint Real and Real Estate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NexPoint Real position performs unexpectedly, Real Estate can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Real Estate will offset losses from the drop in Real Estate's long position.| NexPoint Real vs. ACRES Commercial Realty | NexPoint Real vs. Dynex Capital | NexPoint Real vs. PennyMac Mortgage Investment | NexPoint Real vs. AG Mortgage Investment |
| Real Estate vs. Strategic Asset Management | Real Estate vs. Strategic Asset Management | Real Estate vs. Strategic Asset Management | Real Estate vs. Strategic Asset Management |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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